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Worcester MA

Pros and Cons of Rent to Own Homes in Worcester MA

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Housing is the most basic commodity for every person. Choosing and living in your dream house can simply be amazing. Unfortunately, not everyone can live up to their dreams. There are people who simply cannot afford to buy a new house due to a lack of financial capability. This is the main reason why many people simply prefer to rent because the sad reality is that owning a new house is considered a luxury for many people.

Fortunately, some people find ways to own their dream house by choosing rent to own homes. if you live in Worcester, MA, and you really want to own a house, you should try to this method. Many times, people often choose to rent rather than own a new house because it much cheaper.

Choosing rent to own homes in Worcester, MA is a very good investment because it is practical and convenient. However, choosing this option does entail some drawbacks. Knowing the pros and cons of owning rent to own homes is a very wise step towards home ownership.

Here is some helpful insight that will help you to weigh your options when choosing to buy rent to own homes:

Pros of Rent to Own Homes

Rent to own homes is a very good start if you are planning to move to Worcester, MA. It will give you the option to take the time to find your dream home if this option does not fit into your lifestyle. It will also allow you to know your neighborhood better.

One of the greatest benefits of choosing rent to own homes is that you do not need a  high credit score. It is common for banks to require a 20% to 25% down payment before you can purchase a property. In addition, most of these properties require mortgage insurance as well. Choosing rent to own homes gives you the chance to review your financial situation so that you can take the time to decide if this option will improve your financial capability. Lastly, this option gives you ample time to think seriously about if your chosen house will actually become your dream home.

Cons of Rent to Own Homes

As mentioned earlier, there are also some drawbacks when choosing rent to own homes. First, it is most likely that the payment for rent to own homes are more expensive than the market value of renting a regular home. The reason for this is that the money you pay for rent is actually part of the down payment you pay for the house. Another point to consider is the chance that the you will have to spend a lot of money on repairs for the house. The maintenance cost may be much higher than buying a new house outright. As a result, you should check your financial status to know if you can maintain and buy a house in 2 to 4 years’ time.

Choosing the right house for you and your family is just as important as the method of payment you choose since Worcester, Massachusetts is a very beautiful city to live in. If you are on a really tight budget and do not have enough money to spend on a down payment or have a bad credit record, then rent to own houses will be the ideal option for you. Whatever option you chose, make sure that you only deal with a reputable broker because it will help you decide if choosing this option is a good decision.

 

Risks and Benefits of Rent to Own Homes for Sale in Worcester MA

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For many home buyers, buying a home is the biggest decision and purchase that they will ever make. Buyers and sellers must weigh their options and all the important factors before they agree to a contract that is binding and cannot be backed out of in the future. Just like every agreement, there are advantages and disadvantages for buyers when buying rent to own homes for sale in Worcester MA.

Advantages of Rent to Own

Buyers have time to build their income and credit history while renting the house. This is the very reason why a number of renters opt for this set up. These are individuals who have a bad credit history and not enough savings to buy the house right on the spot. With a rent-to-own agreement, the renter has one to three years to save up for a home and does not have to worry about the downpayment. This is because a portion of what the buyer is paying the seller automatically goes towards the down payment of the house. This takes place if the buyer and seller have already agreed that the buyer will purchase the house at the end of the lease.

If there is something seriously wrong with the house, then a buyer can back out of the agreement. The renter loses the option fee and all the rent credit money that was paid but this amount will be much less in comparison to the amount the renter would have paid for the house outright and decided to leave later.

Disadvantages of Rent-to-Own

Buyers still must pay the upfront option fee. It is usually a percentage of the agreed upon selling price of the home. This often costs around one thousand dollars. The money goes towards the down payment if the renter wishes to buy the house.

If a buyer is one day late on a month’s rent payment, most agreements will void the credit for the month. Here is an example. A three-year renter received a credit of $200 off his rent every month. If the buyer paid the rent late three times a year, then at the end of the lease period, the buyer would receive $1,800 for what was supposed to be the down payment. A buyer must pay on time all the time. That is part of the agreement.

There is also a possibility that repairs must be done. If that is the case, it is the renter’s problem especially when this is during the rental period. This is the very reason why renters must meticulously inspect the house before signing the agreement. Some even bring their own home inspector just to be on the safe side.

A Solid Agreement is Important

Whether the individual is the buyer or the seller when negotiating an agreement for homes for sale in Worcester, MA, both parties have to consider the possible situations that can make them lose money. A thoroughly-made agreement which both parties have agreed on can cover all problems just in case they ever arise.

Lease to Own Homes in Worcester MA : An Option to Consider

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When talking about rent to own,  there are those who do not understand what it is about.  Basically,  renting to own a home is much like leasing and it works in different ways. For instance, tenants can choose to rent for a set period such as a year. When the year is up, they have the choice to purchase their home. A portion of their rent is credited to the sale price of the home that the renter is buying.

Tenants can also buy the property for a pre-determined price when their lease ends as long as they make a downpayment which is non-refundable. After this transaction is done, the tenant is not contracted to purchase at the end of the lease. However, the property owner cannot sell it to anyone else. If you want to rent to own homes in Massachusetts, these are the options that have to be considered.

Option for Individuals with Bad Credit
For those who have credit trouble, this option definitely appeals to individuals who wish to become homeowners but have little or no savings for the down payment. This is also appropriate for people who have no credit or bad credit and not qualified for traditional mortgages. The latter group includes those who have lost their homes in foreclosure or had a negative experience with rent-to-buy contracts. Renting to own is a way to get into a desired neighborhood. It is a way to get into a house and not commit to decades of mortgage payments. This is a great option for those who wish to buy lease to own homes in Worcester MA.

Pros and Cons

Let us discuss the pros and cons. For those opting for the lease rental, the primary advantage for the buyer is that a price can be locked in. However, there are several potential drawbacks and numerous concerns that make rent-to-own more complicated. Oftentimes, it is more expensive compared to just renting. Among these types of homes, the tenant’s rent payment is likely higher than the market rent because this is the eventual down payment on the property. This extra amount is forfeited if the tenant decides to not buy.

Options for Tenants

The potential buyer is also responsible for buying the back taxes that the owner has incurred. Prospective home buyers must have their homes inspected just like any homebuyer purchasing a home in the traditional and conventional manner. However, if the renter/buyer can no longer make payments, this results in eviction and foreclosure.

Some apartments offer the option for their tenants to sign a lease with an option to buy by putting a percentage down which is usually around 20%. The first year of rent goes toward lowering the purchase price. Usually this is a win-win situation for tenants. When looking for homes for sale in Worcester, MA, you can ask the seller if this option is available.

For those who cannot afford the 20% down payment, there are alternatives. There are government home loan programs that lend to individuals with bad credit, have little savings, and low income. There are also low down payment options. If a tenant is renting and able to afford higher payments, this is an opportunity to build a better credit rating and simply make a down payment. Renting to own is one of the smartest decisions a tenant can do. Thinking about the long term and deciding rent to own homes in Worcester, MA makes people feel that their homes are worth investing in.